Stockhouse Short Report: Rolling The Dice On Macau

Financial blogger Timothy Sykes says he recently shorted shares of Asia Entertainment & Resources Ltd. (NASDAQ: AERL) on the expectation the over-the-counter USA stock would lose 50 percent of its value in the next few weeks.

Sykes is a former hedge fund manager who is known for short selling penny stocks. He has no accusations of wrongdoing against Asia Entertainment.

Instead, he says this short side bet – he sold short 3,000 shares at $10.57 on Nov. 8 and another 6,500 at $10.57 the following day -- has more to do with a dramatic rise in the stock price than the high-risk nature of Asia Entertainment's gaming operations for preferred visitors to Macau.

From a low of $5 on October 21, AERL jumped to $11.55 on November 8, when more than 2 million shares changed hands for a second day in succession.

By November 17, the stock had slipped back to $9.25, giving AERL a market cap of $194.6 million, based on 21 million shares outstanding.

Continue reading the article.